'The Mercury prize? Oh God, that would be great. I deserve something'

Doing battle with Alison Goldfrapp is not something to be undertaken lightly. Take her recent run-in with a photographer. Goldfrapp, as the band she founded with Will Gregory are called, were on a stage "about four inches high" and a photographer was irritating the vocalist and obstructing the crowd's view. Alison, who regards photographers as an occupational hazard in the same way that hardened criminals regard judges, totally lost it. "I told him to piss off, which was probably very comical. But then something just took over and I tried to lamp the bastard!"

Goldfrapp, incidentally, is all of 5ft 2in tall. She is tough and complex but also insecure - and very funny. When we're introduced, in a French restaurant as dark and decadent as her music, she blanks me completely, barking down her mobile about some other offending lensman: "He's made me look like a fucking puffy Humpty Dumpty!" When we finally sit down, she orders two bottles of wine, one each, and advises against eating.

Mercifully, she grants me permission to visit the toilet, and winces when I mention her recent photograph in Vogue. "A classic scenario," she sighs. "You'd think you could rely on Vogue to make you look drop-dead gorgeous. I looked like a fucking drag queen!" Thus begins a memorable evening with the suddenly very sought-after elfin hurricane, who looks rather more like a mischievous European actress than a drag queen.

Last September, Goldfrapp released their debut album, Felt Mountain, to general praise. Critics adored its blend of Weimar Republic cabaret, French pop, lush orchestration and cinematic scope. In a landscape of pop fodder, here was something unusual and different. Now the public is catching on.

Slowly but surely, following the pattern set by Moby, their labelmate on Mute, the album has sold 25,000 - a real feat without a hit single (although Utopia, re-released next month, should change that). Marketing has been carried out via press, word of mouth and the odd free track on cover-mounted CDs. In the meantime, the story across Europe has been one of sold-out tours, upgraded venues and general pandemonium - deservedly. Felt Mountain is the early favourite to take this year's Mercury music prize.

"I'm delighted with the attention, but I really don't think we're as commercial as Moby," she frets. "It's been very natural, though, and I like that. I didn't think people would get it in England because we're a bit arty. The Mercury? Oh God, that would be great. I mean, I'm no spring chicken, so recently I've started to think, 'Yeah, I deserve something.' I've been slogging at this for quite a long time. I've had a very weird . . . apprenticeship!" She laughs, and the untouched mineral water topples from the table.

Now in her early 30s, Goldfrapp grew up in Alton, Hampshire, one of those small towns where "you want to get out. There isn't anything else to do, so you take lots of drugs and get beaten up on a Saturday night." She was the "posh girl who lived in the nice street". Her father worked for the Arts Council and the Spastics Society, and her mother was a nurse. "All the mental people would come and see my mum," she recalls, "and usually end up staying."

The family were considered bohemian and eccentric. Mr Goldfrapp (the name is German: "Frapp means hit," she enjoys telling me) would inflict classical music and opera upon his daughter, conducting from the dinner table. At the time, she says, she preferred David Cassidy. Alison went to convent school and still gets misty-eyed about the endless corridors, austere, black-clad nuns, and stone floors flecked with what looked like glitter. "I thought I was in a film," she says.

She says that after being deemed "academically retarded" she was forced to leave the convent and was devastated to have to attend the local comp, where she was vilified as the "snobby little girl from the convent". Lots of "horrible things" happened there, which she doesn't want to expand on. In short, she went seriously off the rails. There were incidents involving borstal boys, glue-sniffing and car theft. Soon afterwards, she departed for London's squats, and her life continued to spiral out of control.

If convent school taught her anything, it was that everyone, no matter how stupid they seemed, was good at something. But what? Goldfrapp was interested in music, art, and drama, but combining any of those with temping jobs in telesales was difficult. She spent four years "living in bedsits and answering ads in Melody Maker". Because she was young and cute and could sing a bit, friends suggested she could be the next Kylie Minogue. Instead, she went to study art at Middlesex College. "That was crucial," she says. "They taught me that it doesn't matter whether you have any money - 'the idea' is everything. Also, that I could do music, and that it didn't have to be pop."

Fired up with a new enthusiasm, she accepted a job singing in Antwerp, Belgium, for a contemporary dance company run by Andy Goldberg, who introduced her to the music of 1950s multi-octave singer Yma Sumac. Goldfrapp was seduced by the "decadence" of all things European. Eventually, though, she tired of the "anal discipline" involved and sought musical freedom. At the same time, her father died and she split up with a long-term boyfriend.

Weirdly enough, everything appears to have taken off for Goldfrapp when she milked a cow, while yodelling ("I've always liked that Swiss kitsch thing"). She was exploring performance art at a party, and among the guests were Orbital, who recruited her to sing - not yodel - on their 1994 Snivilisation album. Still grateful, she subsequently worked with Tricky, singing on 1995's seminal Maxinquaye album and touring with him for two years. If her previous experiences were character toughening, this one gave her steel. It was, she insists, "brilliant", but left her mentally shattered.

"It took two years for me to get my head back to what I wanted," she sighs. "Things were complex because I was good friends with Martina [Tricky's then partner-vocalist], who I effectively replaced. It was highly acrimonious between those two and I was in the middle. I mean, I like Tricky. As much as he's a fucking nightmare. Offensive? He's totally offensive! But I can give it back." Undaunted, she watched Tricky intensely, learning the importance of economy and impulse. "His best stuff was done in his living room," she says. "I'd be standing in the hallway with one working headphone while he went out for chips. When he came back, the track was done."

The importance of working instinc tively was underlined when she provided studio backing vocals for Bryan Ferry, "a perfect gentleman", but who was prone to indecision and "endless tweaking" until eventually nothing was released. However, by now Goldfrapp knew roughly what she wanted. Enter Will Gregory, a composer of film scores best known for ID - the football hooligan film. Gregory came across a tape of Goldfrapp singing Human, which became one of the standout tracks on Felt Mountain.

Mailing tapes of their favourite music (Her: Françoise Hardy. Him: Ennio Morricone) to each other, the pair clicked. Oddly, Goldfrapp insists they both think visually: "What is the scenario behind this song? What are the emotions?" She like beats, but bossa nova rather than bpm. "I've been in things where all these guys talked about was fucking bpm!" she shrieks. "You know, instead of smoking their eighth spliff in their anorak, I want to hear a tune! Will's exactly the same."

Turned down by major labels, the pair secured a contract with Mute in August 1999. Finally a label had recognised Goldfrapp's unique vision and her untrained, operatic-sounding voice. At this point, one of the barmier episodes took place. Fuelled by her post-Ferry hatred of studios, she and Will recorded for six months, from September 1999, in a cottage on a Wiltshire hillside, where Alison often found herself alone.

"It was mad and I wouldn't do it again," she says. "My social and private life collapsed. Because it was a bungalow, it felt really vulnerable. Big windows. Mice in the roof. I like extremes but, at the end of that six months, I really did feel I was going bonkers. I remember spending three days in a raincoat, scrubbing the side of the bungalow because there were all these spiders hatching. I became obsessive about the wildlife I thought was taking over the bungalow. It was disgusting, moths everywhere. You could hear the mice scuttling across the roof."

Mad, but it worked. Felt Mountain has an eerie widescreen, cinematic feel to it. This is partly because it was recorded outside, under the stars, and partly because the feeling of "total loneliness where something horrible is happening" reignited fears from her childhood. In fact, her childhood appears all over the album: twitching curtains, slaughter in the countryside, hints of disturbance. "It's sort of beautifully macabre," she muses. "I love all that David Lynch, Midwich Cuckoos thing. But it isn't cinema. It's real."

Goldfrapp the band occupy unique territory between mischief and danger, blurring fantasy and reality, though their "coffee-table" appeal is undeniable. Alison's lyrics are mostly abstract obsessional tales, using cut-up surrealist techniques. With Will's blessing, she designs their artwork - spooky little birds and limbs in the grass. Felt Mountain's sleeve depicts her head doubled, like a freak show, but also a vagina ("a computer accident, honestly, but I kept it"). She confesses to an "unhealthy" inter est in voyeurism but insists that the notorious publicity photo of her playing piano in her undergarments (taken, importantly, by her friend Anna) was partly triggered by poverty. "After six months in the bungalow, I didn't have any nice clothes. My trousers looked like shit. So I took them off!"

She is aware of her sexuality but is amused and uneasy about reviewers dubbing her a "dominatrix". She insists that, at heart, she is shy and vulnerable, and comes over as a warm, funny, immensely likeable young woman, who can't watch herself on television, worries about seeming a "gibbering twit" in interviews and has endless traumas about her appearance.

"When I was young," she says, "I used to change my appearance three times every day, which drove my mother mad. When I did that Vogue thing, I think I felt that's how I should look. I thought I'd look really sophisticated in a black dress, lots of make-up and fishnet tights. And then I just realised, 'Fucking hell, no!' But I am trying to have fun with it, with all of it."

Throughout her life, it seems, Goldfrapp has been striving to escape something, to create a parallel fantasy world. And if she does become a big star? "I don't crave it," she insists, before adding words which will alarm photographers everywhere: "But I'm sure it would be jolly good fun!"

Goldfrapp play London Union Chapel on May 17 and 18 (020-7734 8932) and tour in May and June. Utopia is released by Mute on June 4.